Industry Consolidation: Risant Health, A National Network for Value-Based Care
In this Cancer Care Business Breakthroughs video, Ron Barkley, MS, JD, Cancer Center Business Development Group, is joined by Barry Russo, MBA, The Center for Cancer and Blood Disorders; Erich Mounce, MHA, Oncology Care Partners; Barbara McAneny, MD, New Mexico Oncology Hematology Consultants; and John Hennessy, MBA, Valuate Health Consultancy. The group discusses the potential impact that Risant Health, a vertically integrated health care delivery network from Kaiser Permanente and Geisinger Health, could have on smaller oncology care providers and patient access to treatment.
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Read the full transcript:
Ron Barkley: Welcome to Cancer Care Business Breakthroughs, a video series in which we host conversations around breakthrough topics and innovations in the business of cancer care and their implications for community oncology. I'm Ron Barkley. I'm a Principal in the Cancer Care Business Exchange, our thought leadership group on matters of business and finance impacting cancer care.
In today's episode, we're going to explore implications for community oncology of the recently announced formation by Kaiser Permanente and Geisinger Health System of Risant Health, their new company that's a proposed national network for value-based care. Our panel consists of individuals who have certainly had their fair share of consolidation in healthcare. Barry Russo, CEO of the Center for Cancer and Blood Disorders in Fort Worth, Barbara McAneny, CEO, New Mexico Oncology Hematology, and immediate past president of the American Medical Association, Erich Mounce, the CEO of Oncology Care Partners, and John Hennessy, Senior Vice President of Valuate Health Consultancy.
To get us started, let me just offer up some basics. Kaiser and Geisinger represent vertically integrated healthcare delivery systems that have the following distinguishing features. It's a combination of a provider and a health plan, a sister health plan, an affiliated health plan. Their model employs directly the core professional physician workforce. Probably most importantly as a distinguishing feature, they're organizations whose care delivery is subject to an annual budget; that is their care delivery is typically at risk to the extent of the budgetary constraints.
Further, let me propose the following scenario. Risant shows up in town and acquires the local market-dominant three hospital system. They also acquire and employ most if not all of the physicians that aren't already in that hospital's delivery system. They launch their own sister health plan preferential or exclusive to the Risant Health, assuming that there wasn't already a plan in place which they would just have acquired.
Given that sort of show-up-in-town scenario, Barry, let's start with you if you don't mind. Let me ask you a couple questions and turn you loose. That's basically, we know your practice operates in a highly competitive and consolidated market in Dallas-Fort Worth. You coexist alongside a number of large consolidated players. So the question is, what might Risant Health coming to town mean for cancer patients, and is there a risk that that occurrence might result in your losing patients due to an increase in the plan membership of the Risant organization? I guess finally, what would you recommend a practice consider or do in response to facing such a development?
Barry Russo: Appreciate it Ron. Just as some background for the Dallas-Fort Worth market, a little bit about our market. We have several vertically integrated systems already in place. I know several of the metropolitan markets do around the country. Some don't, but we do. Beyond MD Anderson, US Oncology, which aren't necessarily vertically integrated delivery systems, but just large competitive systems, we have just in Dallas-Fort Worth six ACOs. They are mostly, mostly, not all, but mostly hospital generated. Some of those ACOs have a health plan attached to them. So there is that sort of vertical integration. In addition, we have Optum Health, which in this market not only employs the largest primary care base, but also surgical, urology and medical oncology and radiation oncology. So in addition, we're a market that has Oak Street Health for primary care and as you know, that was just purchased by CVS Aetna, so that is the next vertically integrated delivery system popping up in the Dallas-Fort Worth market.
Every vertically integrated system is a challenge to how we gain access to patients or how they gain access to us actually, and how we manage just through the pre-certification referral paperwork nightmare. In the market now, because we have so many ACOs all focused on Medicare Advantage as well as what Optum is, I think Barb calls it Medicare disadvantage, right ... But all focused on Medicare Advantage because there's so much money to be made on the Medicare Advantage population that a patient could do nothing but their PCP is changing which vertically integrated system they're connected to, and my current pre-certification and my current referral are no longer any good. I don't even know what's happened. Subsequently, I have to wait to figure out that the claims are being denied before I know that the PCP has made a change. Not the patient, so the patient doesn't even know their PCP changed. The bureaucracy and there's a show on called Ridiculousness, right on MTV for people who are young enough to watch that I guess, which I pretend that I am. That's what this is.
It's just unbelievable complexity and complications that not only challenge the patients' access to oncology care, but challenge our ability to take care of the patients. If Risant comes to the DFW market ... For some reason Texas seems to be a focus of all integrated delivery systems out there ... I don't know why. I don't know if it's because there are 30 million people in the state or it's because there's so much opportunity with Medicare Advantage. Medicare Advantage in our market is about 55% of our Medicare business. It's a huge volume of business in the Dallas-Fort Worth market.
So if Risant comes into the market, I'm sure they'll be focused on Medicare Advantage, and they come with a health plan. So they come with a Kaiser associated with them. Typically, integrated systems initially focus on primary care, and I'm sure that's where they'll look now. Fortunately or unfortunately in the DFW market, a lot of the primary care's sucked up in the existing integrated delivery systems. What I think Risant, if I was in their shoes would do is that there are a couple of ACOs out there in our market who are successful, attached to successful healthcare systems but do not have a health plan attached to them. That's certainly something that may be really interesting to Risant as they get into the market. Does it create more confusion in the market, more difficulty for patients to easily access care? Very much so. Much more difficult for us to even sort of ferret our way through who does this patient belong to.
Because it isn't like they just have United, it's United/ACOA or United/ACOB or it's Humana ACOA or ACOB or ACOC or ACOD. You have to understand that. Is it on their insurance card? Of course not. That would be way too simple for us to even be able to figure that out. So it's super complicated. What they're looking for because I went through this process with Optum when Optum decided to employ its own oncology division, is they're looking to manage the healthcare dollar, a big chunk of the healthcare dollar, which is oncology for the Medicare Advantage population, which I was told was the biggest chunk of the revenue that comes through the integrated delivery system.
So as a practice ... I'll try and get through this quickly as possible .... I know I'm waxing on, but as a practice, what can we do? One, I think as a practice we have to do the best to educate and understand the complexity of our market, do the best to educate our providers and our staff about how the ACO structure works, how the PCP flow works and what are some of the nuances that we really have to focus on in relationship to just managing in a very integrated delivery system market.
Secondly, I think we have to understand how to operate in a value-based system. One of the focuses of Risant, at least from the press releases, is getting connected into markets where value-based care is something they can help us understand. I think it's to our advantage, and I know this from our own market, of understanding how we manage our oncology population, especially at risk. Whether that's upside risk or full risk or some component of risk, we have to understand that so that when integrated delivery systems are looking around for how do they save additional money in oncology, that the answer isn't hire your own and build your own, but the answer is work with the teams that are here who have experience in value-based care and in managing a population.
One of the things that we've had some success doing is using our OCM data. We have five years of it, those of us who are in OCM, which showed that against national standards, we had lower hospitalization, lower total cost of care, lower ER utilization and using that data in our communication with the integrated delivery systems that are either in town or those that are arriving to show that we are the low cost high value provider. Secondly, we have to have a delivery system that's distributed enough around the Dallas-Fort Worth market that we can cover all the lives that many of these integrated delivery systems have across what is probably 100-mile stretch, if not 120, 150-mile stretch.
I think we have to focus on our understanding of how to manage a population in oncology, how to show that we are doing that, how to be able to provide the data that gives them information, showing successes we have and try and convince them that we are the right choice for them as they're trying to manage their oncology dollar. I did try that with Optum when they came into town, and we had great luck doing that for a period of time. Then the leadership at Optum changed, and the option was either be employed by them or they'll build their own.
I'm not saying that my strategy works every time because clearly it does not. But I also think over time these integrated delivery systems will figure out that building your own doesn't make it more efficient. It does not make it higher value at a lower cost and that there are delivery systems out there like mine, like Barb's, where we have experience, we have proven results and we're a valued option for entities like Risant or Optum or CVS Aetna Health. One of the biggest primary care providers in Dallas-Fort Worth is MinuteClinics. So that's CVS Health. I have to understand that so I can understand how to get connected to that structure and get them to understand the value we provide.
In a nutshell, that's kind of what we're thinking about this Risant thing. I do think there are a couple of ACOs in our market that do not have a health plan that are potentially ripe for a Risant affiliation because it sounded like they were willing to do affiliations across the nation. I'm most worried in my market ... I've got so many integrated delivery systems, I'm kind of getting used to dealing with them, but I'm most worried about it for the hospital chains that are managing our rural populations because if it gets on the rural side, it's hard enough to just get the patient to the appointment and find a PCP for them. Nevermind if there's an integrated delivery system that's now got them bouncing around different PCPs and the patient doesn't know where they're going. I don't know where they're going and nobody knows what's happening.
Rural medicine, and especially rural oncology, is a very different animal than non-rural. Our ER utilization is higher ... the ER is the primary care base for rural population, at least rural Texas population and so whole different set of issues, but I worry about that. But if Risant comes to town and picks up as an affiliation, one of our existing ACO structures, my focus is going to be on getting them to understand the value we currently provide and trying to convince them that I have the ability to manage a population better than they can from an oncology standpoint.
Barkley: Terrific, Barry. Thank you very much. I guess when I said you're in a competitive market, I understated that.
Russo: Right.
Barkley: Erich, if we can, let's shift to you and can you sort of explore a little bit about benefit design in a Risant type of organization and particularly what kind of mechanisms might be in a plan design that can influence patient referrals and patient choice access to care.
Erich Mounce: Sure. I think the first thing I should like to say is that Risant, it may be the first, it's not going to be the last and there's going to be continued consolidation of some of these big monsters. If you realize that Kaiser Permanente had 12.6 million members in total, only 1.8 million of those were Medicare Advantage. Really their focus is targeting across the commercial population in these big systems at least right now, and then Medicare Advantage will follow after that.
They're huge, and they're fully integrated. So health plan, hospital, physicians and in some pieces of course ancillary services laying outside of that. That's very appealing to employers in a lot of places, of course depending on pricing. But I think those kinds of things you're going to see more and more of that, and I think Barry's practice and hopefully Barbara's practice about how to figure out how to work with some of these other systems that are trying to do that in collaboration is going to be really important because you're not going to be able to do these kinds of things on your own.
With regard to product design, having run a Medicare Advantage plan in Southern California in Kaiser Permanente's backyard, I think the pieces there are you absolutely can assign and align benefit plans as far as how you're going to keep people in and out of network. You can design it to have zero copays, huge copays. You can design it to have large deductibles, out-of-network deductibles. You can shrink and scale your network in and out all over the place. Does that drive patients crazy? It does. But I will tell you patients that enroll in Kaiser Permanente, especially young patients, are very used to that. I'm not saying it's good, but they're very used to that, and most patients tend to think that they'll stay in those kinds of systems until they're 65, and then they'll move to a Medicare setting.
It's been my personal experience that Kaiser has pretty much failed miserably on the oncology side in a lot of places. I think if there is general medical oncology down to some of the initial diagnosis and maybe some initial treatment, they may do that. They do have medical oncologists. But when it comes to bone marrow transplant, clinical trials, any kind of complex disease, I don't think they do a good job. I do think that they're going to have to turn to outside help by either bringing those in or contracting within their network. So designing a benefit structure that allows that to happen is really going to be based on Risant and what they consider what a group like Barry's or Barbara's would do in order to contract with them.
I think, finally, if you're a member of a Risant team, your ability to go outside of that network is going to get harder and harder. I think that that transparency needs to be really forward and upfront, especially as we talk about how our physicians talk to their patients about whether health plans are good or bad. Because I will tell you that I believe Kaiser ... I'm sure they think they have a good medical oncology program ... They're not going to say they don't ... Now with Geisinger and whatever you want to call their value-based operation, I think that those things will get harder and harder for patients to carve out of.
I think the short answer is benefit design can go either way. That's the beauty about having the health plan, the hospital and the physicians. It will be a key part of anything Risant does going forward. How community oncology, how oncologists respond to that is going to be in a community local setting and how much market they control already and how collaborative they want to be if they don't have a big market share. I'll stop there. Hopefully that answers your question.
Barkley: Yeah, that does, and I appreciate it. I guess another subject for another day is what I think is the whole issue of transparency, sort of non-disclosure, and I think this is particularly true with Medicare Advantage advertisements ad nauseam all Fall with all these benefits, but nobody says, but by the way, you will have managed care, you will have limited networks, things like that. Anyway, another topic.
Dr McAneny, let's switch to you if we may. Just your practice has operated, survived and thrived in a market where it is dominated by a single hospital system health plan combo like a Risant. I guess kind of describe your practice experience and particularly what should other oncology practices think about if Risant shows up in their neighborhood.
Dr Barbara McAneny: Well, let me start by talking about vertical integration. You're right, in my market we've had significant vertical integration since about 2010. We have a hospital which is a not-for-profit hospital that is the same company as a for-profit insurance company.
Vertical integration has a literature that starts in the mid-2017 or so. Capps and Dranove wrote a thing about hospital acquisition of physician prices and documented the increase in cost to patients on those and increase in the hospital spending. The hospitals always say, "Gee, when we merge, we do this for economies of scale. We're just trying to save money out here." One of the things they find is that the hospital mergers do reduce costs frequently because they don't deliver as many services, but they do not pass those diminished costs off in terms of lower prices or in terms of lower premiums if they have a health insurance company. In fact, prices tend to increase by about 6 to 18% in a study of hospital consolidation.
The other thing that we have seen as these hospitals merge and become more vertically integrated with these big systems is several things. One is the smaller hospitals get their profitable departments sold off so that there's nice money on the balance sheet, and then they're less viable in the littler market, whichever market is smaller. That is particularly devastating when you look at the markets that are serving patients with adverse social demographic events. There's lots of examples of that. But even when they merge and are managed far away, the ability of a physician to get what they need for the particular patient in front of them decreases significantly. This is why the AMA fought the process of the health insurance companies merging from the big five down to the big three because the further away that policy is from where I live, the less ability I have to get something for my patients. The practices should not underestimate the adverse effect of this.
I personally happen to believe that healthcare should be a choice for the patient of where to go, that value-based care ought to mean that it provides value to the patient, not value to the payer in terms of more profitability. We as a country are going to have to decide whether or not we want a highly profitable healthcare system for large integrated hospital health plan systems like your Risant or even any of the other consolidations we're seeing because it's highly profitable but it's less and less able to deliver healthcare. Let me give an example of what I've seen in my market and continue to see to this day. A patient of that particular healthcare system is required to get their mammogram at that healthcare system's chosen radiology group. As soon as that patient gets their mammogram there, if it's positive, even if I ordered it, the next thing you know, the nurse navigator has whisked that patient off to the system breast surgeon to then have the system oncologist get that referral, often before the ordering physician, me or a primary care, even knows that the mammogram was positive.
They're very good at diverting the referrals, particularly those referrals that are profitable to the system. For some reason they're not so interested in diverting away the referrals of the 95-year-old patient with metastatic pancreatic cancer where I'm just not going to give chemo, not going to give radiation. I'm just going to hold their hand and keep them on hospice and aim for a comfortable passing. Those people, they're unwelcome to. So this is going to happen when this Risant comes. I think Risant is derived from ricin, which is a very toxic poison. Is that correct? Is that how you made that choice of name? Because I think it fits.
Because I think this is a poisonous process. I think this will eliminate or diminish the ability of patients to have a choice of an independent practice like mine or Barry's and be able to say, "I would like to have a physician fee schedule practice rather than a hospital outpatient practice," not that patients know the difference. But we know that chemotherapy costs 160% of the price paid in a physician fee schedule practice when it's paid in a hospital. I know that if I sold my practice tomorrow to one of the local hospitals, the cost to Medicare and Medicaid would double, and the cost to the commercial plans would go up 3 to 5%. If there were no more independent practices in the area, then there are no breaks on the rising of prices. Look at Massachusetts. So there will be a very bad effect on the local population of patients who are trying to get care.
When Barry made his comment about patient choice and narrow networks and they push the patient for a $5 copay into their system and $100 copay to divert them from my system, that happens and they will do it and use it for that. We will see those kind of changes when a Risant type practice comes to town. Quality does tend to drop. I mean, Robert Wood Johnson did a report in June 2012, long time ago that showed that there is a decrease in quality, and that has persisted. So what we will end up getting with these kind of services is why I call Medicare disadvantage, what I call it. People will trade eyeglasses for cancer care. People will have less access. They won't know whether they're seeing good quality care or not good quality care because they'll have nothing to compare with.
So how would I fight it? How did I fight it when this occurred in my market? We decided to really focus on access and on service because frankly the drugs are the same, but unless you're lowballing the drugs to save money, which one might wonder. But if the access can be faster, which a health plan process actually does not like, because if the health plan can hang on to the money longer and do that overnight trade process they do with the banks to get free interest on the money that they're keeping in their bank accounts, that's free money for them. So they have no reason to try to treat patients expeditiously. If I can say, "I can get you in within half a week," that will be an advantage. Patients hate waiting, so we monitor wait times, and we monitor what we're doing along customer service to be a one-stop-shop for patients.
If you look at a quality metric that I would like to see as opposed to the ones that CMS makes us do, which I've never found at all useful in my practice, would be time from diagnosis to on treatment. Because I think community oncology with lower bureaucracy and with the type of integration that we have in our practices of working together with our partners in the related specialties is going to be much faster at coming up with a treatment plan that's acceptable to the patient and the patient's family and getting it in place, getting it activated, getting it monitored and getting the patient through it. I think the country will be poorer, and patients will receive significantly less quality of care if we let the Risant's of the world take over.
Barkley: Thanks so much for the insight. You're scaring me.
Dr McAneny: I am scared. I think you should be scared because sooner or later we are all patients, and sooner or later there're going to be a lot of large companies who are going to make a whole lot of money. But guess what? They are not going to go get their healthcare in those communities where they devastated the local hospitals and the local medical community. That's not where those people will be, but it's where we will be.
Barkley: I say you're scaring me. John, let's shift to you. Dr McAneny talked a bit about the economics on the provider side, the integrated system side. You've done a lot of work in the area of patient out-of-pocket exposure and financial toxicity, and I guess would like to hear some insights you might have from the patient viewpoint of the economics of a Risant type, call it what it is, an HMO, showing up in town. What is their out pocket financial toxicity exposure? How has it changed from a fee for service world, if at all?
John Hennessy: It's a great question, and I think it's worth noting that the two entities that are currently in Risant are unicorns. Kaiser is a unicorn, and Erich knows from competing against them ... I started my career in California, you did as well, Ron ... They've been around for a long, long time. In fact, some people give them credit for starting the entire concept of health insurance in this country back in the 1930s. They keep a whole lot of patients really satisfied, and they do it I think in two ways. They have a very competitive premium, and for people who are making choices between putting groceries on the table or paying a health insurance premium that matters. It matters a whole lot, and it matters with every single paycheck. So I think they do a relatively good job there.
I think the second thing they're very good at is managing capacity in primary care. As Barb talked earlier, getting access to care is a major problem in a lot of places. To the extent that you can actually access primary care, your out of pocket concerns about what you may be experiencing at an out-of-network urgent care center or an emergency room or other places like that kind of go away.
What I think is interesting is both Kaiser and Geisinger offer within their own health plans broad options for access and narrow options for access. Obviously there's a premium element to that, but if you want a narrow network, they've got one for you. If you need a broader network either because you're a national employer or because you want to add PPO or POS services to it, you can do that as well. But I think there's something about the predictability that works for a whole lot of folks, and I assume all of us, there's 12 million members there, I know Kaiser members who are very satisfied with what they get. I think we've all met people who've been unsatisfied with Kaiser, but I think the same has been true with Aetna and Cigna and other plans that we all work with.
I have physician friends who are very happy working in Kaiser and are working in an environment that they think supports what they want to do. I have many friends who are physicians in fee for service who can't imagine working in that sort of lifestyle. But from a patient perspective, if you are concerned, as many Americans are, about, "How am I going to put food on the table next week, can I make my utility payments the next month," having a low premium option is a fair trade-off.
Barb and I have had discussions about do you make decisions differently before you're diagnosed with cancer rather than after you're diagnosed with cancer? I think people do, and there's good evidence for that. The ASCO Quality Conference last year, the University of California San Diego did some work on this. What's interesting is that while patients may opt for or may think they want a broader network, the economic realities of out-of-pocket costs impact this as well. A lot of folks actually wind up with more narrow options or less expensive options when they have been diagnosed with cancer because they have to deal with loss of income from work, things like that.
I think one of the areas I think we can be very successful in community practice is thinking about the entire patient and not just how we are treating them, but making sure they have access to care and making sure we get them back to the life they had before, at least a new normal that includes being active with family, being active with work, things like that. I'm not sure that the unicorns who are at Risant today can't do any of that stuff. Kaiser had about five posters at the ASCO Quality Meeting and a focus on goal concordant care, which I know some small practices are still working on making sure that's happening a lot. They had a focus on what patients are getting access to, patient assistance programs and how they're utilizing them. So I think that they're a formidable competitor.
Ron, you and I had a quick discussion about this, what's next? What's the third leg of this stool? I bet if we took a poll and submitted our results in envelopes, each of us might have a different answer to what we think the third leg of the stool is and whether it can be consistent and be the same sort of unicorn, sort of different experience that these two current entities have and whether that's something that consumers will embrace.
Barkley: Appreciate it. I've got to go brush up on what the other two legs of the stool are before I know the third. Look, I did want to give everybody an opportunity on the panel too, if you have any last parting words of wisdom or advice and practices that you haven't already shared, now's the time to speak up.
Dr McAneny: I'll jump in with that. This is Barbara again. As I look at my market, which is highly consolidated as well, there are a few remaining independent practices in various specialties. I think that is the role for a clinically integrated network, which I do not see as the same as an ACO. I mean, I'm very disappointed in the outcome of ACOs. Some of them saved money, mostly the ones that didn't have a hospital in it, but they spent most of that money going to the IT systems to create the ACO, and very few of them have actually delivered any increased dollars to the practices that are working in them. Most of them have carved out the sick people, the people we take care of in oncology.
However, locally, one of the things I'm working on is with a group of progressive independent practices who recognize that one of the things we will need to do is to preserve our referral base five years down the line, to create an integrated network where we really stress working together, where we really stress ease of referrals back and forth and information sharing and not necessarily going at risk. I don't see that risk is a requirement, but we all will start with our own employees as patients because benefit design is something that is not a cast in concrete thing. I mean, the health plans have convinced us that everybody has to have a copay, and that is actually not the case. In my own practice where we're self-insured, two years ago I got rid of the copays for doctor visits because I thought, "Why would I not want my patients to see their doctor and stay healthy and be able to come to work?" This year I got rid of the copay on drugs, and my premiums have been flat, and my utilization has been flat.
So the difference is I'm actually not trying to make money off my employees when I provide health insurance for them. My maximum out of pocket is $2,000 a year. We're able to do that even with a small group because we're really looking hard at what is the benefit design that would be optimal to keeping people healthy and being able to use the low cost, high quality independent providers of care and avoiding hospitalizations by really aggressively managing patients before they require the hospitalization. I think that is what value-based care ought to be as opposed to providing value for various payers. So thank you for the soapbox opportunity.
Barkley: Let me thank today's panelists, Barry Russo, Erich Mounce, John Hennessy, and Dr McAneny for their insights on this important and sometime controversial subject. We look forward to building on this conversation in upcoming Business Breakthrough videos and at our annual conference in October, registration of which is now open. Thank you all for your interest in this subject and for listening in to our Breakthrough video series today.
